Updated: October 30, 2026
Ground rent agreements can raise long-term housing costs, especially when the rent increases over time or the lease has many years left. The amount and timing of those increases determine how much a leaseholder may pay.
Ground rent is a payment set out in a lease, but its future cost can be easy to overlook when buying a home. Understanding how the agreement sets the rent and any changes helps you assess the ongoing expense before you commit.
| Arrangement | Who owns the home? | Who owns the land? | Ground rent for land? |
|---|---|---|---|
| Own home and land | Resident | Resident | No |
| Own home, rent land | Resident | Freeholder | Yes |
| Rent home and land | Landlord or home owner | Freeholder | Land rent applies within the arrangement |
- 53% manufactured home residents who own both their home and land
- 29% manufactured home residents who own their home and rent the land
- 18% manufactured home residents who rent both the home and the land
- 20% versus 40% owned manufactured homes purchased new: rented land versus residents who own home and land
- 19% residents who own manufactured homes on rented land and live in homes built before 1976
How does ground rent affect long-term property costs?
Ground rent increases long-term property costs because a leaseholder pays it repeatedly to the freeholder in addition to the cost of the home. The total effect depends on the lease agreement between the lessor and lessee, including how the payment is set out.
A ground lease separates ownership of the land from ownership of the building or home on it. You may own the property itself while paying for the right to use the land beneath it, so the purchase price alone does not show the full ongoing cost.
Who owns the home and who rents the land?
In a manufactured-home community, a resident may own their home but rent the plot it occupies. That means ground rent remains a recurring housing expense even though the resident owns the structure.
To assess the long-term cost, check the lease for the ground-rent amount and the terms governing payment over time. The agreement determines the obligation; do not assume the rent stays unchanged or follows a particular schedule unless the lease says so.
How does renting the land change a manufactured-home arrangement?
Renting the land separates the cost of the plot from ownership of the manufactured home: you may own the home while paying rent for the land it sits on.
The Pew Charitable Trusts found that 53% of manufactured home residents own both their home and land, 29% own their home and rent the land, and 18% rent both the home and the land. These arrangements are different: a land-rent obligation does not mean you rent the home.
What the figures mean for long-term costs
The Pew Charitable Trusts found that 20% of owned manufactured homes on rented land were purchased new, compared with 40% of homes owned by people who also own the land. The figures distinguish home ownership from ownership of the plot; they do not make the home and land a single cost.
- Home and land owned: the resident owns both.
- Home owned, land rented: the resident owns the home but pays rent for the plot.
- Home and land rented: the resident rents both.
To assess a long-term cost, check exactly what the agreement covers: land alone, or both the land and the home. That distinction determines whether the rent is for the plot, the home, or both.
What can a community’s lease terms mean for financing?
The lease terms can affect whether a manufactured home community owner qualifies for financing: The Pew Charitable Trusts says an owner of any manufactured home community must meet minimum lease-term and protection requirements for the community to qualify for a loan through Fannie Mae or Freddie Mac.
Those requirements concern the community owner’s loan. They do not replace or determine a resident’s separate obligation to pay ground rent under the resident’s lease.
What residents should check
Before comparing the cost of a manufactured home on leased land with a home-and-land arrangement, review the lease itself. Focus on the points that determine what you pay and how long the arrangement lasts:
- Lease term: how long the agreement runs.
- Rent terms: the amount and conditions of the ground rent payment.
- Protections: the rights and safeguards set out in the lease.
The financing effect depends on the agreement negotiated between the lessor and lessee. Read the actual lease terms rather than assuming that a community owner’s access to financing changes your payment obligation.
What trade-offs can come with owning the home but renting the land?
Owning a manufactured home on rented land means you own the structure but still owe recurring rent for the plot; paying off the home does not, by itself, end that obligation.
The Pew Charitable Trusts found that 19% of residents who owned manufactured homes on rented land lived in homes built before 1976. The age of the home is one consideration, but ownership and land use are separate parts of the arrangement: owning the building does not give you ownership of the site it occupies.
Check the home and the land separately
- Home: Confirm who owns the manufactured home and whether any loan or other payment obligation remains.
- Land: Confirm who owns the plot and what recurring rent is due for its use.
- Lease: Read the terms governing continued use of the land, including what happens when the lease ends or the home changes hands.
These checks matter because a resident can own the home while another owner controls the land beneath it. Do not assume that paying off the structure also settles the rent or secures the right to keep it on the plot; check the lease before agreeing to the arrangement.
What should you check before comparing ground rent agreements?
Before comparing ground rent agreements, check who owns the land, who owns the home, who receives the rent and what the written lease requires for continued occupation.
- Payment and recipient: Confirm that the recurring payment is for use and occupation of the property, and identify the freeholder who receives it.
- Written lease: Read the lease itself for its term, payment terms and protections. A general description of ground rent does not tell you what a particular agreement requires.
- Contract and writing: A ground lease is a contract. The Attorneys’ Title Guaranty Fund notes that, under Illinois statute 740 ILCS 80/2, long-term ground leases must be in writing to satisfy the statute of frauds.
- Whole arrangement: Compare ownership of the land with ownership of the home, the recurring rent and the lease conditions that govern continued occupation. These terms work together; the rent alone does not show what the arrangement costs or permits.
Check the lease for the exact payment obligations and the conditions attached to staying in the property before weighing one agreement against another.
Frequently asked questions
What is ground rent?
Does owning a manufactured home mean you own the land?
Can community lease terms affect financing?
What should I review before accepting a ground rent agreement?
Sources
- Attorneys' Title Guaranty Fund, Inc — “Ground Leases”
- US Legal Forms — “Ground Rent: Understanding Its Legal Definition and Implications”
- The Pew Charitable Trusts — “Millions of Homeowners Who Rent Land Are at Risk of Price Increases or Eviction”
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